Bacteriophage lambda when expressed from a prophage causes several changes in host physiology (transformation). Two regions of the prophage DNA encode genes (hin) which cause this effect. One of these regions is cloned in a plasmid and defines an open reading frame of 186 bp. The effects caused by hin can all be related to membrane changes in the host. Another phage function(s) causes the induction of certain host proteins which are a subset of the E. coli heat shock proteins. This function of lambda as well as the hin function are all located in the same PL-transcription unit.